Royal Caribbean Cruises Ltd.

What they do

Royal Caribbean Cruises Ltd. is a global cruise vacation company operating the Royal Caribbean International, Celebrity Cruises, and Silversea brands, with unconsolidated interests in TUI Cruises and Hapag-Lloyd Cruises. The company operates three exclusive private destinations: Perfect Day at CocoCay (owned island in the Bahamas), Labadee (leased peninsula in Haiti), and Paradise Island (Royal Beach Club in the Bahamas, opened December 2025). Revenue comes from passenger ticket sales and onboard and other revenues, including casinos, tours, and concessionaire fees.

Revenue drivers

• Passenger ticket revenues — Generated from cruise ticket sales and air transportation to/from ships; represents the primary revenue stream, driven by capacity growth and pricing.
• Onboard and other revenues — Includes onboard sales (casino, tours, insurance), concessionaire fees, and procurement/management services for unconsolidated affiliates; supplements ticket revenue.
• Private destinations — Perfect Day at CocoCay, Labadee, and the new Paradise Island (opened Dec 2025) serve as ports-of-call, enhancing itinerary appeal and driving onboard spending.

Recent performance

For Q2 2026, total revenue was $4.8 billion (up 6% YoY), net income was $1.1 billion ($4.20 EPS), and Adjusted EPS was $4.21, above guidance. Load factor was 110%, with 2.4 million guests carried. Full-year 2025 results: revenue $17.93 billion, net income $4.27 billion, diluted EPS $15.61. For Q1 2026 (ended March 31), revenue was $4.45 billion; Q4 2025 revenue was $4.26 billion.

Strategy

Management targets approximately double-digit revenue and earnings growth in 2026, supported by a 'Perfecta' program aiming for 20% earnings CAGR from 2024 to 2027 and ROIC in the high teens by 2027. The company is expanding its portfolio with new ships, such as Legend of the Seas (third Icon-class ship) launched in July 2026. It is also deepening guest engagement through loyalty and technology platforms to increase repeat rates. The company focuses on fortifying its balance sheet and maintaining a strong booked position at record prices.

Risks

• Havana Docks litigation — A Helms-Burton Act lawsuit resulted in a $112 million judgment (reversed on appeal) but the Supreme Court granted certiorari; outcome remains unpredictable and could result in significant liability.
• Geopolitical disruptions — Prolonged geopolitical activity has caused a modest, near-term booking impact on select itineraries, potentially affecting demand and revenue.
• High debt and interest costs — Total liabilities were $34.18 billion as of June 30, 2026; debt service and refinancing risks could pressure cash flows and profitability.
• Seasonality and demand fluctuations — Revenues are seasonal with strongest demand in Northern Hemisphere summer and holidays; weather or economic downturns could reduce bookings.

Outlook

For full year 2026, management expects revenue to grow 9% year over year, with Net Yields increasing 2.35% to 2.85% as-reported (1.75%-2.25% constant currency). Adjusted EPS guidance was raised to $17.73-$17.87, representing 14% YoY growth. Load factor and close-in demand remain strong, despite the modest geopolitical-related booking impact on select itineraries.